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Archive for Friday, January 9, 2009

’08 sales tax collections are ‘cause for optimism’

Numbers seem to defy national gloom

Kansas University junior Zach Shoffner tests an electric guitar before a wall of musical merchandise Thursday at Mass. Street Music, 1347 Mass. Sales tax revenue for the city of Lawrence was up 3.8 percent for 2008.

Kansas University junior Zach Shoffner tests an electric guitar before a wall of musical merchandise Thursday at Mass. Street Music, 1347 Mass. Sales tax revenue for the city of Lawrence was up 3.8 percent for 2008.

January 9, 2009

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’08 sales tax collections are ‘cause for optimism’

Money talk coming out of city hall was gloomy for most of 2008. But tonight, new numbers on sales tax collections are brighter. Enlarge video

Take comfort or solace in this thought: 2008 may end up being the good year.

Despite dark financial headlines for much of the year, Lawrence sales tax collections in 2008 grew at their most robust rate since 2004. The city collected $21.2 million in 2008, up 3.8 percent from the $20.4 million collected in 2007.

“These numbers are absolutely a cause for some optimism,” City Commissioner Rob Chestnut said. “It shows that we’re still a viable destination for many people.”

Since the beginning of 2008, City Hall leaders have been fretting over whether sales tax collections would take a downturn — first amid rising energy prices and a sputtering real estate market, and then amid the credit crisis that hit late in the year.

Some local retailers weren’t necessarily surprised by the results.

“I think they’re wanting to keep their purchases closer to home this year,” said Dan Hughes, owner of Sunflower Outdoor & Bike Shop in downtown. “They’re saying these businesses are important to them and to the community.”

But there is a caveat with the most recently released numbers. Weakness in collections did begin to show up in the fourth quarter of the year. For the final three months of 2008, sales tax collections were down by about 1 percent compared to 2007.

Plus, those numbers don’t show sales during the worst of the financial crisis. The government sales tax reports generally lag actual sales by about 30 to 60 days, meaning that sales from much of November and December have yet to show up in the totals at City Hall.

Both retailers and city leaders, though, were touting the latest numbers as good news, in part, because the numbers were better than the statewide average. According to data from the Kansas Department of Revenue, statewide sales tax collections for the first six months of the state’s fiscal year are up only about 1 percent.

Longtime retailer Joe Flannery, president of Weaver’s in downtown Lawrence, said he thinks the good results can be attributed to the stability the university provides the local economy.

Chestnut also thinks the university is playing a role by helping attract more visitors to the city.

“We’re having home football games where we’re putting 48,000 people in the stadium, and maybe a few years ago we didn’t have that,” Chestnut said. “I think as an entire community, we’ve started to create more events that draw people to town.”

In real numbers, sales tax collections came in about $132,000 higher than the city had budgeted for in 2008. That windfall will do a little to help ease revenue pressures in 2009. Chestnut said every little bit will help because he thinks sales tax collections will be under pressure in the near term.

“You have to figure the first half of 2009 won’t be that bright,” he said.

Comments

Andrew Stahmer 5 years, 3 months ago

Can we pleeeze get back to the important stuff!?Hedgehogs and kids in ties.Thank you.

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cthulhu_4_president 5 years, 3 months ago

Um, I know, I believe I said mine was old, and I am aware that there are places called stores where people buy new things.......now calm down and reach for the blood pressure meds.

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DonQuipunch 5 years, 3 months ago

cthulhu_4_president (Anonymous) says…DonQui: My old Fender Squire was mexican, thank you very much.<<<<Yes, and now all NEW ones (you know, like you would find in music stores) are made in China.

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hawkperchedatriverfront 5 years, 3 months ago

Mr. Lawhorn, instead of giving us a touch feely article should have presented the facts about sales tax collections. Let's see a breakdown:Alcohol salesHotel/Lodging sales taxSales tax revenue from Mass st shopsAutomobile salesWestar sales tax which the city getsAquila sales tax which the city getsRestaurant sales tax revenueAutomobile repair sales taxHome Improvement centersthere are a few just for starters.

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cthulhu_4_president 5 years, 3 months ago

DonQui: My old Fender Squire was mexican, thank you very much.

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johnwoods 5 years, 3 months ago

FYI: The increase in the sales tax rate due to the November election takes place on April 1, 2009.

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johnwoods 5 years, 3 months ago

KU won the Orange Bowl and the Basketball National Championship. Since both these will not occur again (most likely) we should be worried about the sales tax figures more than be optimistic! These two events probably accounted for $3.5 million in additional sales in Lawrence, possibly more. This accounts for the entire increase Lawrence realized. And we will have one less home football game in fall 2009 than we had in 2008...so don't count on athletics to help us realize any gain! We may see a sales tax decrease of at least $70-80,000 just because of the loss of that missing football game. Add that loss in revenue to the $140,000 to get $210,000 in sales tax revenue we will not see next year due to happenings related to KU Athletics. Too bad we don't have that Missouri game in Lawrence!Please Commissioner Chestnut...don't be too optimistic about our year-end figures or use the figures as a basis for planning and budgeting...you can never plan on athletic successes to drive your revenue!

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DonQuipunch 5 years, 3 months ago

Yes, avoice, spending $1.69/gal for 4 gallons of gas is an awful waste to go save $50 at a "trendy" retailer like Guitar Source of Big Dude's.Get a clue.

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avoice 5 years, 3 months ago

Maybe a lot of Lawrencians could no longer afford to shop at trendy K.C. retailers or even buy the gasoline to get there, so they are shopping closer to home now.

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not_so_greek 5 years, 3 months ago

Joe Flannery is right. You tax-haters ought to be praising the presence of the University on this one. I promise you these sales tax trends are not holding in other parts of the state.

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flux 5 years, 3 months ago

How huch for the cream left handed strat on the wall,,,,seriously? Whats your best offer?

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SettingTheRecordStraight 5 years, 3 months ago

bowhunter,When does the emp-T tax hike go into effect??

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cowboy 5 years, 3 months ago

I would not be optimistic at all. While I had a great year in my own business i can see alot of signs that the local spenders may be going down for the count and would suspect that this first quarter is where the rubber meets the road. Better to have it in the bank than to try and borrow it from the bank. Time to be ultra conservative in spending .

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DonQuipunch 5 years, 3 months ago

Poor Zach will have to choose between paying too much from crappy Chinese (Fender Squire) guitars or paying way too much for nice (Taylor) guitars. Perhaps Zach should go to Kansas City.

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Bowhunter99 5 years, 3 months ago

Wait until the sales tax goes up another 0.5% to support the mT.... then the tax collections are going to go up even higher in 2009....

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gareno 5 years, 3 months ago

When prices are higher...you collect more sales tax. Genius.

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